Ž . Intern. J. of Research in Marketing 18 2001 37–51 www.elsevier.comrlocaterijresmar Managerial assessment of potential entrants: Processes and pitfalls Bruce R. Klemz a,1 , Thomas S. Gruca b, ) a Department of Marketing, Winona State UniÕersity, Winona, MN 55987, USA b Department of Marketing, Tippie College of Business, UniÕersity of Iowa, 108 Pappajohn Business Building, Iowa City, IA 52242-1000, USA Abstract While others have studied the awareness and action phases of incumbent response, there has been little research on the threat assessment phase. In this paper, we focus on the incumbent’s threat assessment decision process, i.e. how task characteristics can influence the evaluation of potential entrants. In an experiment using experienced marketing managers as subjects, we examine the influence of firm dependence, decision accountability and task complexity on their information acquisition behavior while assessing potential entrants. Our results provide important insights into how companies can and cannot improve managerial assessment of potential entrants. q 2001 Elsevier Science B.V. All rights reserved. Keywords: Managerial assessment; Potential entrants; Decision making 1. Introduction Conventional wisdom suggests that incumbents should respond vigorously to an entrant in order to limit any adverse impacts associated with the attack Ž . Porter, 1985, p. 498 . This advice is reinforced by normative models showing that the optimal response to entry includes reducing prices, changing market- ing expenditures and, possibly, repositioning the Ž . product e.g. Hauser and Shugan, 1983 . However, a ) Corresponding author. Tel.: q 1-319-335-0946; fax: q 1-319- 335-1956. E-mail addresses: bklemz@vax2.winona.msus.edu Ž . Ž . B.R. Klemz , thomas-gruca@uiowa.edu T.S. Gruca . 1 Tel.: q 1-507-457-2662; fax: q 1-507-457-5001. review of the empirical research on response to entry reveals a very different picture, specifically, the most Ž common response to entry is no response at all Yip, . Ž . 1982; Robinson, 1988 . Boulding et al. 1994 sug- gests that research on managerial decision making should focus on such gaps between observed behav- Ž . ior and normative prescriptions. Since Porter 1985 considers the threat assessment of potential entrants as one of the most important steps in formulating defensive strategy, we focus on the evaluation pro- cess used by incumbents to determine which poten- tial entrants pose a significant threat. The objective of our research is to examine how the information acquisition behavior of marketing managers is affected by decision characteristics in Ž their analysis of potential entrants Deshpande and 0167-8116r01r$ - see front matter q 2001 Elsevier Science B.V. All rights reserved. Ž . PII: S0167-8116 01 00029-5